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Voters to decide tax for highways, local development ballot measures

By Rob Moritz

Arkansas News Bureau

LITTLE ROCK — For a change, the people of Arkansas will decide for themselves whether to raise a statewide tax.

In the Nov. 6 general election, voters will decide the fate of a proposed constitutional amendment for a temporary one-half cent state sales tax increase to finance a $1.8 billion bond issue to build a four-lane highway system connecting all corners of the state.

Voters will consider another ballot question that would allow cities and counties to do three things:

• Have the ability to issue bonds to retire unfunded liabilities of closed police and fire pension plans, and the ability to ask voters to raises tax to pay the bond debt.

• Use special revenues to pay principal and interest payments on short-term debt obligations.

Also on the ballot will be a proposed initiated act to authorize the use of marijuana for medicinal purposes.

Two proposals to allow casino gambling in the state will appear on the ballot, but the state Supreme Court has already ruled that votes for a measure to authorize casinos in seven counties will not be counted because the proposal was deficient. The high court has not yet ruled on a challenge to the sufficiency of a proposal by professional poker player Mary Todd to operate casinos in four counties.

Both proposed constitutional amendments, Issue 1 and Issue 2, were referred to the ballot by the Legislature in 2011, and both are supported by Gov. Mike Beebe.

Craig Douglass, spokesman for Move Arkansas Forward, the group pushing the highway program, said television advertising for the proposal will begin Wednesday during the presidential debates.

Move Arkansas Forward has raised about $700,000 since January and is spending more than $500,000 on the television ads, Douglass said. Highway construction companies have contributed heavily to the campaign.

“Quite a few of the contributions have come from economic development groups, and also from local chambers of commerce, but there is no question that we have great support from the industry because it is the industry that will be creating the jobs,” he said.

Proposed highway construction

Highway construction under the plan would focus primarily on creating a statewide four-lane grid and adding capacity to existing four-lane highways. Some of the larger and expensive projects planned include widening Interstate 540 to six lanes from Fayetteville; widening Arkansas 18 from Jonesboro east to I-55; expanding U.S. 412 to four lanes between Walnut Ridge and Paragould; widening U.S. 67-167 between Jacksonville and Cabot; widening I-40 from Little Rock to Conway; replacing the I-30 bridge over the Arkansas River; and widening U.S. 70 from I-30 to Hot Springs.

Douglass said the 30-second television ads will be shown statewide and regionally, and radio and newspaper advertising will occur closer to the Nov. 6 general election.

“We have a number of commercials that have been developed for regional viewers,” he said, adding that each regional ad will detail specific projects that will occur in that area if the temporary sales tax is approved.

Rep. Jonathan Barnett, R-Springdale, who sponsored the highway bond proposal in 2011, said recently that it is needed because the current highway funding system, which depends on increasingly flat fuel tax revenues to pay for road projects, is inadequate. Highway officials have estimated nearly $20 billion in highway needs over the next decade and anticipate revenue of about $4 billion.

Scott Bennett, director of the Arkansas Highway and Transportation Department, estimates the half-cent sales tax increase, which would sunset in 10 years under the proposed amendment, could generate more than 40,000 jobs.

The measure is supported by the Arkansas Municipal League and dozens of other organizations and groups across the state.

Economic development

Don Zimmerman, executive director of the Arkansas Municipal League, said his organization also supports Issue 2, which would assist cities and counties in several different ways.

“We supported it during the 2011 session,” he said.

Paul Easterer, spokesman for Downtown Arkansas, a loosely knit group of civic leaders, business people and city officials, said the measure “is a tool chest item that cities and counties need.”

He and Zimmerman said any sales tax increases to pay off the bonds used for economic development and redevelopment would have to be approved by voters.

“In Kansas, they say that is the greatest economic development tool they’ve got in the state,” Zimmerman said.

The Municipal League director said the second section of Issue 2 would help a number of cities and counties in Arkansas that “have old, closed local police and fire pension systems that are on the verge of insolvency.” Issue 2 would allow those local governments to issue bonds and ask voters to raises sales taxes to pay off the bonds.

The third section of Issue 2 would amend Amendment 78 of 2010, which raised the interest limit on retail lending, change the interest limit on government bonds and provide a means of financing energy-efficiency projects.

Zimmerman said Amendment 78 currently allows cities and counties up to five years for short-term indebtness, which must be repaid from a city or county’s general funds. Issue 2 would allow cities and counties to also pay off the bonds out of special funds.

Neither measure referred by the Legislature appears to have organized opposition.